SMALL BUSINESS
MANAGEMENT
Chapter 2
The Small Business Decision
The Small Business Decision

Personal Evaluation
Advantages of Small Business
Ownership






More personal contacts with people
Independence
Skill Development
Potential Financial Rewards
Challenge
Enjoyment
Disadvantages of Small
Business Ownership






Risk
Stress
Need for Many Abilities
Limited Financial Rewards
People Conflicts
Time Demands
Demographic Characteristics
of Entrepreneurs






Parents owned business
Foreign parents
High school degree or less
College or more
Age 31 and under
Age 40 or more
Personality Characteristics Required
by Successful Entrepreneurs






Achievement Orientation
Risk Taking
Independence, Self Confidence, Self
Assurance
Innovativeness
Strong Verbal and Numerical Skills
Selling Skills
Personality Characteristics Required
by Successful Entrepreneurs




Selling Skills
Problem Solving Abilities
Strategic Planning
Perseverance
The Small Business Decision

Organizational Evaluation
Small Business Successes



Alertness to Change
Ability to Attract and Hold Competent
Employees
Staying Close to the Consumer
Small Business Successes



Thoroughness with Operating Details
Ability to Obtain Needed Capital
Effective Handling of Laws, Rules, and
Regulations
Small Business Successes

Environments Conducive to Small
Business Success



Personal Attention to Daily Operation
Owner Contact with Employees
Small or Local Demand
Small Business Successes

Industries that Require Flexibility



high growth rates, erratic demands,
perishable products
More Labor and Less Capital Intensive
Considerable Government Encouragement
Small Business Failures

Bankruptcies
Entrepreneurialship and Small
Business Management

Entrepreneurial Skills

Characteristics


creativity, innovativeness, independence, risktaking, idea-oriented
Situations

generating ideas and solutions to problems,
starting a new business, expanding or opening
new products, reaching performance
objectives, maintaining control of operations
Entrepreneurialship and Small
Business Management

Managerial Skills

characteristics
develops strategy and goal setting, prefers to know
outcomes of actions or activities, team player, works
through others, skills in finance, marketing, personnel,
operations
 situations
 generating ideas and solutions to problems, starting a
new business, expanding or opening new products,
reaching performance objectives, maintaining control
of operations

Concept Checks



1. What are the major causes of
business failure?
2. What are the characteristics of a
successful business?
3. List the advantages of owning a
small business.
Framemakers Part 1


What aspects of Robert and Teresa’s
background will contribute to their success
if they decide to go ahead with picture
framing store?
What further areas should Robert and
Teresa explore before making this
decision?
Concept Checks



4. List the disadvantages of owning a
small business.
5. What are the characteristics of
successful small business owners?
6. What is the difference between an
entrepreneur and a manager?
Concept Checks